Central Bank of Egypt and syrian
Central Bank of Egypt
Press Release
December 29, 2016
In its meeting held on December 29, 2016, the Monetary Policy Committee (MPC) decided to
keep the overnight deposit rate, overnight lending rate, and the rate of the Central Bank of
Egypt's (CBE) main operation unchanged at 14.75 percent, 15.75 percent, and 15.25 percent,
respectively. The discount rate was also kept unchanged at 15.25 percent.
Annual headline inflation rose to 19.43 percent in November 2016 from 13.56 percent in
October 2016, as the monthly rate increased to 4.85 percent in November from 1.70 percent in
October. Consumer prices during November were strongly impacted by the economic reform
measures related to the foreign exchange rate market liberalization as well as the hydrocarbon
subsidies adjustment. The bulk of the monthly increase occurred due to core items, particularly
food and retail, which came in addition to higher regulated prices. Consequently, annual core
inflation rose to 20.73 percent in November 2016 from 15.72 percent in October 2016, while
the monthly rate rose to 5.33 percent in November from 2.81 percent in October.
In the meantime, annual real GDP maintained a steady pace of growth during 2015/16,
registering 4.3 percent compared 4.4 percent in 2014/15. Labor market data show that the
unemployment rate narrowed to 12.5 percent in the quarter ending June 2016 after peaking at
13.4 percent in the quarter ending December 2013, which coincided with lower real unit labor
costs since 2015. The unemployment rate inched up to 12.6 percent in the quarter ending
September 2016.
Developments in the external environment show that there has been some firming of
international commodity prices, while low global inflation and subdued global growth maintain
weak pressures on domestic prices, respectively.
From the monetary perspective, broad and reserve money growth are likely to be impacted
going forward by the phasing out of monetary financing of the fiscal deficit as well as by
relatively higher foreign reserves accumulation. Moreover, broad money growth is strongly
affected by the revaluation effects of its foreign currency components.
Looking ahead, annual inflation is expected to narrow after being impacted by transitory costpush factors stemming from the economic reform measures. The MPC had acted preemptively
in its extraordinary meeting on November 3, 2016 by raising the key CBE rates 300 basis points
in anticipation of the inflationary pressures.
At this juncture and given the balance of risks, the MPC judges that the key CBE rates are
currently appropriate. The MPC reiterates its price stability mandate and will continue to
closely monitor all economic and monetary developments, and will not hesitate to adjust the
key CBE rates to ensure price stability over the medium-term.
Monetary Policy Sector
Tel: +20227701315
E-mail: monetary.policy@cbe.org.eg
Press Release
December 29, 2016
In its meeting held on December 29, 2016, the Monetary Policy Committee (MPC) decided to
keep the overnight deposit rate, overnight lending rate, and the rate of the Central Bank of
Egypt's (CBE) main operation unchanged at 14.75 percent, 15.75 percent, and 15.25 percent,
respectively. The discount rate was also kept unchanged at 15.25 percent.
Annual headline inflation rose to 19.43 percent in November 2016 from 13.56 percent in
October 2016, as the monthly rate increased to 4.85 percent in November from 1.70 percent in
October. Consumer prices during November were strongly impacted by the economic reform
measures related to the foreign exchange rate market liberalization as well as the hydrocarbon
subsidies adjustment. The bulk of the monthly increase occurred due to core items, particularly
food and retail, which came in addition to higher regulated prices. Consequently, annual core
inflation rose to 20.73 percent in November 2016 from 15.72 percent in October 2016, while
the monthly rate rose to 5.33 percent in November from 2.81 percent in October.
In the meantime, annual real GDP maintained a steady pace of growth during 2015/16,
registering 4.3 percent compared 4.4 percent in 2014/15. Labor market data show that the
unemployment rate narrowed to 12.5 percent in the quarter ending June 2016 after peaking at
13.4 percent in the quarter ending December 2013, which coincided with lower real unit labor
costs since 2015. The unemployment rate inched up to 12.6 percent in the quarter ending
September 2016.
Developments in the external environment show that there has been some firming of
international commodity prices, while low global inflation and subdued global growth maintain
weak pressures on domestic prices, respectively.
From the monetary perspective, broad and reserve money growth are likely to be impacted
going forward by the phasing out of monetary financing of the fiscal deficit as well as by
relatively higher foreign reserves accumulation. Moreover, broad money growth is strongly
affected by the revaluation effects of its foreign currency components.
Looking ahead, annual inflation is expected to narrow after being impacted by transitory costpush factors stemming from the economic reform measures. The MPC had acted preemptively
in its extraordinary meeting on November 3, 2016 by raising the key CBE rates 300 basis points
in anticipation of the inflationary pressures.
At this juncture and given the balance of risks, the MPC judges that the key CBE rates are
currently appropriate. The MPC reiterates its price stability mandate and will continue to
closely monitor all economic and monetary developments, and will not hesitate to adjust the
key CBE rates to ensure price stability over the medium-term.
Monetary Policy Sector
Tel: +20227701315
E-mail: monetary.policy@cbe.org.eg